Debra Borchardt
Curaleaf Holdings, Inc. (OTCQX: CURLF) reported managed revenue increased 186% to $233.3 million in the fourth-quarter ending in December and grew 21% sequentially. The total revenue for Curaleaf was $230.35 million which increased 205.3% but missed estimates by $7.86 million. Still, the stock rose by 15% prior to the company’s earnings release and closed at $16.37.
The net loss for the quarter was $35.3 million, which was higher than last year’s net loss of $26.6 million. The fourth-quarter earnings per share were -$0.05, which missed estimates by $0.04. The company said that the increase in losses was due to a $16.3 million increase in depreciation and amortization and a $10.5 million increase in share-based compensation, both of which are non-cash, a $25.8 million increase in income tax expense, and a $20.3 million increase in net interest expense.
For the full year of 2020, revenue grew 161% to $653 million. The net loss for the year was $61.7 million versus a net loss of $67.2 million for 2019. The decrease was a result of a $24.1 million increase in other income, which is mainly driven by gains on investments partially offset by impairment on the Eureka license, and a $52.0 million increase in the fair value of biological assets.
“Curaleaf’s record fourth-quarter results reflected the benefit of our acquisition of Grassroots, which expanded our presence into 6 new states, including high-growth markets such as Illinois and Pennsylvania as well as the continued ramp-up of Select, which is now in 17 states,” said CEO Joe Bayern. “In 2021, we expect to see the positive benefits of the transformative legalization of adult-use cannabis in Arizona and New Jersey. As we have stated, we believe New Jersey will accelerate the potential of future adult-use in key states such as New York, Pennsylvania, and Connecticut. Each of these markets present an enormous growth opportunity for us, as Curaleaf is the only MSO with a leading presence in every one of these states.”
In the fourth quarter, the company completed the acquisition of Alternative Therapies Group (“ATG”), divested Curaleaf Maryland’s assets for a total consideration of $4.0 million, and launched 32 new formulated products across form factors during the quarter.
European Move
Curaleaf also announced that it was buying EMMAC Life Sciences Limited, the largest vertically integrated independent cannabis company in Europe for$286 million to be paid 85% in Curaleaf subordinate voting shares and 15% in cash. Contingent consideration of up to $57 million will be paid in Curaleaf subordinate voting shares and cash in the same ratio based upon the successful achievement of performance milestones. The proposed transaction provides Curaleaf with a developed platform for entry into the European cannabis market.
Management Comments
Boris Jordan, Executive Chairman of Curaleaf commented, “In parallel with the announcement of our record financial results, earlier today Curaleaf issued a separate press release announcing its entrance into the European cannabis market with acquisition of EMMAC Life Sciences Limited, Europe’s largest vertically integrated independent cannabis company. This milestone transaction will give Curaleaf a leading presence in key European medical cannabis markets including the United Kingdom, Germany, Italy, Spain, and Portugal, among others. The proposed transaction will provide Curaleaf with access to the European market of 748 million people, representing another transformational growth driver for Curaleaf for years to come.”
Mike Carlotti, Chief Financial Officer of Curaleaf, added, “Curaleaf, once again, delivered record quarterly and annual results highlighted by record Managed Revenue, Pro Forma Revenue, and a 27% sequential improvement in Adjusted EBITDA. With our successful integration of Alternative Therapies Group in October 2020 , starting next quarter, we will no longer report Managed Revenue thus simplifying our financial reporting. Our recent capital raises further strengthen the Company’s balance sheet providing it with ample capital to pursue planned organic growth initiatives, potential investments in states that may go adult-use sooner than later and for strategic acquisition opportunities. We believe that 2021 will be yet another record year for Curaleaf as we continue to expand our cultivation in key markets, open additional stores, expand our product and brand platforms, invest in future growth opportunities as well as see the benefit from Arizona’s recently approved adult use market and potentially New Jersey’s in late 2021.”
